Contained within a campaign, an Ad Group is a collection of one or more PPC ads that all target the same set of keywords. All PPC ads are required to be part of an Ad Group.

A subset of a campaign composed of keywords, ads and bids that is a key part of how your account is organised (Source)

A set of keywords, ads and bids that is a key part of how your account is organized. Each campaign is made up of one or more ad groups

Contains one or more ads that target placements (websites or subsets of websites) or categories. You set a bid, or price, to be used when your ad is triggered by the targeting criteria in the ad group. You may also set prices for individual placements within the ad group.